We are looking at better lending rates, which would help the developers’ complete projects on the fastrack, said Manik Anand CEO, White Knight Realty, in an exclusive email interview with SME Times.

Excerpts of the interview…

1. As the leading real estate portfolio management company, is commercial real estate investment a good plan?

Answer- Absolutely. Commercial real estate investments offer much higher ROIs than those on residential investments. You are looking at ROIs between 6–12%, and in some cases, we have even achieved 15–18% ROI per annum. The tenants are primarily MNCs or a variety of retail brands. Retail availability is already limited. If you look at the Noida Master Plan of 2032, only around 1.7% of the total land area in the region is dedicated to commercial development. However, with the influx of multiple IT powerhouses and Fortune 500 companies such as Google, Ernst &Young, PWC, NEC, Infosys, TCS, KPMG, and Accenture etc setting up shop on the Noida Expressway, the future looks promising and bright.

2. What are the trigger points for commercial real estate?

Answer- Well, I would say that return on investment in residential properties is low. The rental rates on residential properties generally range from 1 to 1.5% annually, capping out at 2–2.5%. This does not even cover inflation, which is hovering at around 7%. Therefore, I advise that, if you already possess a home, you should not look at residential investments to obtain greater capital gains; rather, you should consider commercial investments. In the long term, commercial investments consistently outperform traditional investments, such as mutual funds, equities, stocks, and commodities.

3. From a bird's-eye view, how will 2023 turn out for the real estate sector?

Answer- It's looking very promising, lots of influx in the Noida region, primarily. The main catalyst for this is the upcoming International Airport. Delhi, the capital of the country, is set to get its second international airport, which is also set to be the third largest airport in the world and the biggest in Asia. This has led to a lot of interest from all global markets. Especially with the US and European regions seeing a downturn and a recession of sorts in the last year, with the interest rate hiking up and inflation at record levels currently, people from all over the world are looking at India as an investment option. Due to which, the unsold inventory in the region is currently may be at a 10 year low right now. A lot of industries, warehouses, corporate clients, and Fortune 500 companies are setting up shop in the region because of the excellent infrastructure that the region has to offer and the excellent connectivity to all of North India from the expressways that the region has to offer; the airport; the metro; and the existing connectivity to Delhi that the city has. So, it's all guns blazing for 2023.

4. Is the luxury real estate market influencing investors to invest in luxury property?

Answer- That's a good question. When I say that you shouldn't be looking at residential property to invest in, the luxury real estate is on another tangent altogether. We saw this majorly during the pandemic. If they must be cocooned in the house, the kids need a separate room to attend the online classes and study, while the elder members of the family have to work from home and set up home offices. So, the people realised that the existing areas were too small, and that is what led to the rise in inquiries right after the first lockdown was lifted in August 2020. We have also seen unprecedented launches across the country and, at the same time, an excellent response from the global NRI audience, looking to acquire a piece of land or an apartment back home. With the dollar also touching a record high, it makes sense to buy real estate in the country now and take advantage of it. That is what drove the luxury real estate segment for a three-bedroom apartment ranging from about 2,000 to 3,000 square feet, going up to plush 4BHKs at 6 to 10,000 square feet. Generally, these bigger apartments with better specifications also tend to offer higher rentals than the other normal budget homes or normal housing because they tend to cater to the top management of all these IT giants who are setting up shops in the country.

5. Clearly, there have been high expectations for the upcoming Union Budget 2023–24. Should there be such high expectations? What are a few of your suggestions for this?

Answer- Fingers crossed! We are looking at better lending rates, which would help the developers’ complete projects on the fastrack. Secondly, we are also expecting better repo rates or a reduction in repo rates, which would in turn affect the monthly EMI payments of residential buyers, which should also drive-up demand. With "INDIA SHINING" and all eyes on India as the fastest-developing region on the globe, the upcoming financial budget should provide the impetus needed to accelerate the real estate sector, which is one of the biggest contributor to the country's GDP.